Visa vs. MasterCard: An Overview

The electronic payments industry is dominated by four companies. Visa, MasterCard, American Express, and Discover are responsible for handling the majority of the world’s card payments. Visa and MasterCard present unique offerings since neither company is involved with extending credit or issuing any cards. This means that all Visa and MasterCard payment cards are issued through some type of co-branded relationship. While the two companies don’t extend or issue any cards, they do partner to offer the broadest array of products encompassing credit, debit, and prepaid card options.

Most Americans today have at least one debit and credit card. Many people have a number of them, seeking to take advantage of all the rewards, cash-back opportunities, and promotional benefits that issuers have to offer.

Credit cards often dominate the headlines, with approximately $2 trillion in outstanding revolving credit balances. Consumers are easily familiar with debit cards, reporting around 174.2 billion in transaction volume—representing $97.04 trillion in value—annually. As the financial technology market evolves, more and more prepaid card offerings are also being brought to market, generating around $200 billion in annual volume.

Key Takeaways

  • Visa and MasterCard are the two largest payment processing networks in the world.
  • Visa and MasterCard do not have issuing bank divisions, which leads both to have a portfolio of only co-branded payment card offerings.
  • Visa and MasterCard partner with financial institutions and retailers for their co-branded card relationships.

Understanding Visa and MasterCard

Visa and MasterCard are the only network payment processors that are involved in all three areas of the payments market. Working exclusively as network processors, these two companies have a unique edge but operate differently.

Visa and MasterCard are both publicly traded. Visa commands a $365 billion market capitalization while MasterCard follows closely behind at $293 billion (market caps as of March 3, 2020). Since neither company extends credit or issues cards through a banking division, both have a broad portfolio of co-branded offerings.

The business models of both companies are very similar. Visa and MasterCard partner with banks, credit unions, and retailers to offer payment cards for individuals and businesses.

Setting Terms and Conditions

The issuing financial institution sets the payment card’s terms and conditions, including fees, rewards, and other features. (Retailers usually work with a third-party financial institution.). For credit cards, the issuing bank is responsible for underwriting, interest rate structuring, and the full development of reward programs.

Card issuers can also offer other perks such as identity theft and fraud protection, car rental insurance, or business purchase discounts. While differences in interest rates, credit limits, rewards programs, and perks are controlled by the issuing financial institution, Visa and MasterCard compete for the co-branded relationship and also take part in the drafting of card terms.

Overall, the card payment industry is a complex one, involving merchants, merchant acquiring banks, issuer banking, network processing, and cardholders. Network processors, and specifically MasterCard and Visa, have the freedom to structure their fees in any way they like. This structuring and reporting is one of the biggest differences between the two largest network processors.


In 2019, Visa generated $23 billion in total revenue with payments volume of $8.8 trillion. Visa’s core products include: credit, debit, and prepaid cards as well as business solutions and global ATM services. The company’s reportable business segments include the following:

  • Service
  • Data Processing
  • International Transactions
  • Other

Both Visa and MasterCard earn the majority of their revenue from service and data processing fees but the two companies characterize these fees differently and also have their own fee structures. Service fees are charged to the issuer and are based on card volume.

Data processing fees are generally also charged to the issuer who in turn retrieves these fees by charging merchants for each individual transaction. Data processing fees are typically very small, fixed fees, charged on a per-transaction basis that cover the costs of providing transactional information communicated on the network.

In general, Visa is known for offering three card levels: base, signature, and infinite. These categories come with standardized provisions for issuers.


In 2019, MasterCard generated total revenue of $16.9 billion, with a payment volume of $6.5 trillion. MasterCard’s core products include consumer credit, consumer debit, prepaid cards, and a commercial product business. MasterCard has one reportable business segment known as Payment Solutions which is broken out by geographies across U.S. and other.

Like Visa, MasterCard earns the majority of its revenue from service and data processing fees. However, it characterizes the fees differently. Service fees for MasterCard are negotiated and calculated as a percentage of global dollar volume. Data processing fees are known as switching fees. Switching fees are a small, fixed cost per transaction, charged to the issuer.

Master Card is generally known for its three standardized offerings: base, world, and world elite.